On-demand deals a new dawn for TV

CBS exec says offering episodes when viewers want them is an evolutionary step and another way for viewers to `plug back in'

November 09, 2005|By Phil Rosenthal

What happened this week to television was big.

Remote control big. VCR big.

Just as the zapper made it possible to rifle through TV programs at REM-cycle speed and the videocassette recorder let us watch shows on our own schedule, the deals CBS and NBC announced Monday grant even more power to the living room electorate.

Joining the on-demand media world, CBS has arranged to make just-aired episodes of some of its most popular shows available on demand, beginning in January, to Comcast subscribers who pay extra for digital cable service in cities where the network owns stations (such as Chicago). The price will be 99 cents per program.

NBC Universal made its own 99-cent deal, enabling the DirecTV satellite service to offer new episodes of certain programs, also just hours after they first air. The arrangement is a little more complicated than CBS', involving special digital video recorders or pay-per-view channels, but the result is more or less the same.

These baby steps are hardly the death of television as we know it. But, along with ABC's recent decision to make some hit shows available for sale on the iTunes Web site, they might be the beginning of the end for that age-old viewer's lament: "There's nothing good on right now."

"The lesson of what happened yesterday, which I do believe is a seminal day in the history of television, is that the rigid distribution chain that everybody has been used to is getting shaken apart," Josh Bernoff, a media analyst for Forrester Research, said Tuesday.

"The future is about whatever I want, wherever and whenever I want it ... and the more ways you do that, the more revenue there is for everybody in the business."

Even if these distribution models turn out to not be the ones that endure--and smart money says the prices, availability, selection of shows and the inclusion of ads are all subject to change over time--it seems likely this is going to be one more way to watch network TV in the years to come.

"Anything that increases the number of revenue streams is going to make a big difference," Bernoff said.

CBS Executive Vice President Martin Franks, the Michigan City, Ind., native who cut the network's Comcast deal, sees it as merely an extension of network television, not a replacement.

"If you didn't have a network in the first place, how would anybody know they wanted to watch `CSI' or `Desperate Housewives' in the first place?" Franks said.

"For the foreseeable future, people are still going to enjoy sitting down to watch `Survivor' as some sort of family unit on Thursday night [at 7 p.m.]. But there are going to be people who can't watch it then, and this is going to be wonderful for them to catch back up. We're trying to give people as many ways to plug back in as possible."

CBS, unlike NBC and ABC, is including ads in its supplementary on-demand offerings. "We wanted to send a message to our advertisers that we see it as an extension and a reinforcement of the network ... not a cannibalization of it," Franks said.

Still, the reason its Comcast deal covers only cities where CBS owns stations is to head off complaints (such as the ones ABC's iTunes deal drew) from affiliates owned by other companies that it is stealing viewers without compensation.

While no one is saying what the revenue split on these on-demand deals will be, a CBS exec last year estimated the network takes in about 36 cents per hour for each prime-time viewer. So a 50-50 split on the 99-cent fees would more than cover whatever dropoff is caused by the secondary viewing option.

"Someone asked me this morning, `What are your projections?' Well, we don't have any," Franks said. "The whole reason for doing this is to find out if there's any steak to this sizzle. We think there's going to be. ... We're not a [non-profit] organization. We think this is going to be a moneymaking venture.

"The nice thing is, unlike so many things in this business where you get endless speculation but no real conclusion, starting the first of January, if you're a Comcast subscriber in Chicago and you've got a digital box, we're going to know whether you like this product."

As Bernoff points out, networks have, to this point, mostly served two roles. One has been to help make TV shows, help finance them and then promote them. The other has been to broadcast them.

"You're seeing the first role become more important than the second in that, yeah, it's great to broadcast the program, but that's just the beginning of that program now getting out to consumers," he said.

"The prime-time schedule is still going to be important to roll things out there in the same way that theater distribution is important to the film industry. But that's just the beginning now. The scheduling isn't the end-all. Shows that only succeed because of their lead-in, that's on the way out."

Some will see this as a way to prop up shows with marginal audiences, making them financially viable. But that might not be the case.